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NERC says Discos will compensate electricity consumers for power delivery failure

Discos have been warned to compensate consumers should they fail to supply them the required amount of electricity in the new tariff regulation.

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Togo, Niger, Benin remit N2.04 billion to Nigeria for power supply, NERC postpones increase of electricity tariffs

The Federal Government has warned power distribution companies (Discos) that they will compensate affected consumers for defaulting in service delivery if they fail to supply the required quantum of electricity under the new service reflective tariff regime.

According to a report from Punch, this disclosure was made by Sanusi Garba, the Vice Chairman of Nigerian Electricity Regulatory Commission (NERC), who doubles as a commissioner at the commission, in Abuja. He said that NERC had deployed a mechanism to monitor the Discos.

READ: FG says no electricity tariff increase for poor, vulnerable Nigerians, gives conditions for increase

NERC had revealed that all Discos committed to delivering agreed quantum of power to customers in various categories beginning from September 1, 2020, when the new service reflective tariff regime started. The commission is expected to start monitoring the Discos on a monthly basis to ensure compliance by the power firms in terms of meeting the agreement.

He said the service reflective tariff, which took effect on September 1, 2020, before it was suspended for 14 days after an agreement between the Federal Government and labour unions, would ensure that customers of distribution companies paid for what they consumed.

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READ: PenCom recovers N17.51billion from defaulting employers, imposes penalties

Garba said, “The commission has come forward to say tariffs will be service-based, meaning that you will pay your rates in correlation with the level of service you get. Now, obviously, the commission has its own mechanism for monitoring the performance of the Discos. This is because if a Disco says you are in Band C, it means the Disco is committed to giving you between 12 to 16 hours as a minimum.

“So the role of the commission is to monitor and at the end of the month to determine which Disco has complied with their service commitment or not. And consumers will be compensated for failure to deliver on that service. We do not expect consumers to start putting gadgets to monitor electricity.”

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READ: CBN moves to ring-fence Disco collections

He explained that the monitoring was on the basis of clusters, as the commission would monitor all consumers in a particular area, for instance, those on Bands A, B or C.

He admitted that NERC would not expect consumers to be the ones to monitor compliance by Discos. He said that consumers are to follow the normal processes of complaining so that the commission will step in to resolve the issue if they believe that there has been service failure.

READ: FG signs bilateral air service agreement with United States, others

When told that many consumers do not have the required meters to make the right tariff payments, Garba said the government was working towards providing funding for meters.

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He said, “On the issue of metering and the concern that consumers don’t have meters, I’m sure you are aware that the commission issued an order capping the amount of energy that an unmetered customer should be billed. That was designed to make all Discos to expedite the process of providing meters to all consumers because that is the way the electricity business is designed to run.

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Garba said the commission was now looking at the timelines, the rates, installation rates, specifications, etc, in order to make the story of estimated billing a thing of the past.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

4 Comments

4 Comments

  1. obot

    October 11, 2020 at 6:13 pm

    liars do it first before story

  2. Udo

    October 11, 2020 at 8:08 pm

    Hope the agency of government shows some of seriousness

  3. Chris

    October 12, 2020 at 7:21 am

    Both NERC and the DISCOS kill and divide

  4. Rahman

    October 12, 2020 at 4:15 pm

    There are few questions to ask
    1- do we suppose to buy the meter from the discos or is for free
    2- which quarter do we lay our complain for unmeter household and exorbitant bills are given to
    3- is police force responsible to carry out the FG regulations on the amount stated for unmeter house

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Energy

Abuja, Ikeja Discos top list in collection efficiency in Q1 2020- NERC

Abuja and Ikeja had highest in collection efficiency, out of the 11 electricity distribution companies in Nigeria.

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Abuja, Ikeja Discos top list in collection efficiency in Q1 2020- NERC, Estates in Lekki increase electricity tariff to N105/kWh, Eko Electric, Ikeja and 5 others to face NERC sanction for non-compliance, CBN reveals framework for financing National Mass Metering Programme (NMMP)

A report released by the Nigerian Electricity Regulatory Commission (NERC) revealed that Abuja and Ikeja DisCos scored the highest in collection efficiency, out of the 11 electricity distribution companies in Nigeria, for the first quarter of 2020.

In appraising the individual performances of the DisCos, Abuja DisCo had the highest collection efficiency of 80.89%, followed by Ikeja DisCo with 72.39%. Port Harcourt DisCo has the lowest collection efficiency of 43.36%.

READ: FG to inject over N198 billion on capital projects in power sector in 2021

READ: NERC to sanction 7 DisCos over uncapped estimated billing

However, on a quarter-on-quarter basis, only Abuja and Kaduna DisCos recorded improvements in collection efficiency. In particular, Kaduna DisCo recorded the highest increase of 3.65 percentage points, moving from 40.44% in 2019/Q4 to 44.09% in the first quarter of 2020.

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The total revenue collected by eleven electricity distribution companies (DisCos) from customers in the first quarter of 2020, Q1 2020, stood at ₦114.29 billion out of a total bill of ₦186.82 billion.

READ: Togo, Niger, Benin remit N2.04 billion to Nigeria for power supply

READ: NERC says Discos will compensate electricity consumers for power delivery failure

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The DisCos’ collection efficiency, which is arrived at through total revenue collected as a ratio of the total billing by DisCos, declined in 2020/Q1.

The overall collection efficiency for all DisCos decreased to 61.18% in the first quarter of 2020, representing 8.26 percentage points decrease from the 69.44% collection efficiency recorded in 2019/Q4.

READ: FG discloses how the problem of the power sector was created

READ: DMO offers N150 billion worth of FGN Bonds for subscription

The collection efficiency implies that for every ₦10.00 worth of energy billed to customers by DisCos in the first quarter of 2020, approximately ₦3.88 remained unrecovered from customers as at when due.

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Low collection efficiency combined with billing inefficiencies have had adverse impact on the financial liquidity of the industry, which in turn, has led to low investment in the Nigerian Electricity Supply Industry (NESI).

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READ: FG discloses how the problem of the power sector was created

READ: What to do if your DisCo has not complied with reversed electricity tariff this week

What you should know

  • Low collection efficiency has been largely attributed to the customers’ displeasure with estimated billings which have often resulted in an unwillingness to pay the bills.
  • The Commission, during the quarter, issued an order on capping of monthly estimated bill, limiting the total volume of energy an unmetered customer can be billed to the average monthly energy use of a typical pre-paid meter customer in the same business unit.
  • Abuja Electricity Distribution Company (AEDC) is one of the 11 power distribution companies that was privatized and handed over to new investors on 1 November 2013. KANN Utility Limited (KANN) is the 60% equity holder in AEDC. The Federal Government of Nigeria holds 40% equity in AEDC. It has franchise for the distribution and sale of electricity in the Federal Capital Territory, Niger State, Kogi State and Nassarawa State.
  • Ikeja Electric Plc is based in Ikeja, the capital city of Lagos. The company emerged on November 1, 2013 following the handover of the defunct Power Holding Company of Nigeria (PHCN) to NEDC/KEPCO Consortium under the privatization scheme of the Federal Government of Nigeria.

READ: Recycling firm invests $8m in Nigerian factory following China’s ban

READ: FG owes DisCos over N500 billion in electricity Subsidy – PwC 

READ: FIRS charges VAT on betting and lottery games, as stakeholders protest

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Energy

Power: Nigeria records transmission peak of 5,459.50MW – TCN

TCN has announced that it hit a peak transmission of 5,459.50MW on the 28th, October 2020.

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Discos, TCN suspends KEDCO, TCN suspend Kano Electricity Distribution Company, Kano Electricity Distribution Company, Transmission Company of Nigeria, Market Operator in Nigeria's power sector

The Transmission Company of Nigeria (TCN) announced that it hit a peak transmission of 5,459.50MW on the 28th, October 2020.

This was disclosed on Thursday in a statement by Ms Ndidi Mbah, General Manager, Public Affairs, TCN.

She said Nigeria hit the milestone on October 28th and surpassed the earlier record of 5,420.30MW achieved on August 18.

What you should know

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Nairametrics reported that the Minister of Power, Engineer Sale Mamman, disclosed that Nigeria’s installed grid power generation capacity has grown from 8,000MW to 13,000MW under the leadership of President Muhammadu Buhari.

The new peak surpasses the 5,420.30MW achieved on Aug. 18 by 39.20MW,” Ms Mbah said.

The Acting Managing Director, Mr Sule Ahmed Abdulaziz, commended all the players in the power sector value chain for the feat.

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He attributed the gradual but steady improvement in the quantum of power delivery to collaboration by the sector players, as well as, the unbridled effort by the Federal Government – through the Ministry of Power – in setting the right environment for seamless operations.

The Acting Managing Director said the company will continue workings towards improved power transmission across the nation.

Nairametrics reported in August that the Federal Government of Nigeria revealed that the Siemens $2 billion power deal, under the Presidential Power Initiative (PPI) will save the nation over $1 billion annually.

Structure of the PPI funding:

  • 85% from a consortium of banks guaranteed by the German government through credit insurance firm, Euler Hermes.
  • 15% of the FG’s counterpart funding.
  • 2–3 years moratorium.
  • 10–12 years repayment at concessionary interest rates.

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Energy

Exxon Mobil to cut 14,000 jobs as pandemic hit oil demand, prices

Exxon Mobil announced it will slash its global workforce by 15% over the next two years, as it struggles to preserve dividends.

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Exxon Mobil to cut 14,000 jobs as pandemic hit oil demand, prices, ExxonMobil to Divest oil fields in Nigeria, Domestic oil companies

Exxon Mobil Corp on Thursday, October 30, 2020, announced that it will reduce its global workforce by 15% by the end of 2022 – an unprecedented culling by North America’s biggest oil explorer, as the coronavirus pandemic hits energy demand, prices, and struggles to preserve dividends.

The job cuts are expected to include 1,900 U.S. jobs – mostly in Houston, the headquarters for its US oil and gas businesses – as well as layoffs previously announced in Europe and Australia and reductions in the number of contractors, some of which have already taken place.

READ: Exxon Mobil, Chevron record their worst losses in history

READ: Presco Plc projects N24.53 billion turnover in Q4 2020

This was disclosed in a statement that was released by the energy giant on Thursday, October 30, 2020.

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The staff reduction is part of the latest effort by the Chief Executive Officer, Darren Woods, to curtail spending and halt the worst string of quarterly losses since Exxon assumed its modern form with the 1999 takeover of Mobil Corp.

READ: Chevron considers divesting from Nigeria, to focus on U.S Shale Oil

What you should know

Exxon and other oil producers have been slashing costs due to a collapse in oil demand and prices, as well as ill-timed bets on new projects. The Big Oil rivals of Exxon are also cutting thousands of jobs in response to the pandemic-induced demand slump. BP Plc plans to slash 10,000 jobs, Royal Dutch Shell Plc will cut as many as 9,000 roles, and Chevron Corp. has announced around 6,000 reductions.

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Norton said that Exxon’s workforce stood at about 88,000 people, including 75,000 in-house employees and about 13,000 contractors as of year-end 2019.

READ: Why the NNPC is being dragged to US courts by Exxon Mobil, Shell

Exxon’s job cut is a sign of its weakened financial position compared to its former status as the S&P 500 Index’s biggest company less than a decade ago, and a profit powerhouse used to ride out oil-price cycles.

This year’s downturn has been particularly damaging because it also affected refining, usually a cushion in times of low oil prices. Also, it came at a time when Exxon was already increasing borrowing to fund a large expansion program. The company was forced to retreat on these plans in April, reducing capital spending by $10 billion and delaying or scaling back most of the major projects.

READ: Exxon begins talks with domestic firms to divest businesses in Nigeria

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The stock has plunged more than 50% this year. Its dividend yield is now more than 10%, indicating that investors are anticipating a cut. Exxon maintained the quarterly payout on Wednesday and is expected to post its third consecutive quarterly loss when it reports earnings tomorrow.

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What they are saying

The Company in its statement said, “These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions.’’

Exxon’s spokesman, Casey Norton, through an email said that the total reduction means the company will reduce its workforce by about 14,000 people, split between employees and contractors from year-end 2019 levels. The cuts will come through attrition, targeted redundancy programs in 2021, and scaled-back hiring in some countries.

READ: Google fired up, post strong advertising growth

What this means

Another set of job losses in the oil sector in Nigeria is looming. Nigeria is one of Exxon’s biggest operational bases in oil and gas exploration and production globally. Also, this is another setback after Shell announced 9,000 job cuts globally, which includes Nigeria, and the announcement by Chevron that it plans to reduce its staff strength in Nigeria by 25%.

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